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I think this argument ignores Wall Street's outsized influence on government policy; look at the 2008 recession, in which Wall Street's bad bet on a real estate

by clipsy 3y ago

I think this argument ignores Wall Street's outsized influence on government policy; look at the 2008 recession, in which Wall Street's bad bet on a real estate bubble got bailed out while the actual home owners were thrown out onto the street and financially ruined. The government may not explicitly protect home prices, but it does protect Wall Street from its own risky behavior, which inexorably turns any drop in home prices into an opportunity for Wall Street to "buy the dip" while regular citizens struggle to keep a roof over their head.

huevosabio 3y ago
Wall Street's influence pales in comparison to the influence of the American homeowner. What we have is the result of decades of making owning a home the main way to accrue wealth and then giving homeowners outsized power. Wall Street is just following the money.
- deleted 3y ago
  [deleted]
- jerry1979 3y ago
  Perhaps we could say what the goldbugs have been saying for years: it's the money that's the problem.
- clipsy 3y ago
  And yet homeowners got fucked and Wall Street got bailed out. Where was the mythical homeowners' political power when prices were plummeting (in my neck of the woods by 30-50%) and they were threatened with the possibility of foreclosure on an upside-down mortgage?
  - taylodl 3y ago
    You're only threatened with foreclosure should you fail to pay your mortgage. Your mortgage being upside-down has nothing to do with it. Having said that, the major banks shouldn't have got bailed-out either. Smaller banks that were responsible would have had the opportunity to grow when the larger banks faltered due to their bad decisions. As another commenter here quipped, the first houses Wall Street bought were in Congress.
lotsofpulp 3y ago
> The government may not explicitly protect home prices, It absolutely does by offering 30 year fixed rate loans with no prepayment penalty and all the underwriting waivers for people to be able to pay more than they can afford, such as no money down and 5% down mortgages.
- clipsy 3y ago
  And despite all that, home prices did, in fact, go down during the 2008 recession. And while the government does -- as you point out -- establish policy that biases the market in favor of home prices increasing, the government does not protect home prices the way it protects Wall Street from bad investments.
  - lotsofpulp 3y ago
    “Wall Street” investments go down in price too (in real and nominal terms). Many businesses fail and cause equity owners to lose money. Just like home (land) prices in certain parts of the country. But the prices in the overall market, just like “Wall Street” is backed (and juiced) by the federal government.

by clipsy 3y ago

huevosabio 3y ago

Wall Street's influence pales in comparison to the influence of the American homeowner. What we have is the result of decades of making owning a home the main way to accrue wealth and then giving homeowners outsized power. Wall Street is just following the money.

deleted 3y ago
[deleted]
jerry1979 3y ago
Perhaps we could say what the goldbugs have been saying for years: it's the money that's the problem.
clipsy 3y ago
And yet homeowners got fucked and Wall Street got bailed out. Where was the mythical homeowners' political power when prices were plummeting (in my neck of the woods by 30-50%) and they were threatened with the possibility of foreclosure on an upside-down mortgage?
- taylodl 3y ago
  You're only threatened with foreclosure should you fail to pay your mortgage. Your mortgage being upside-down has nothing to do with it. Having said that, the major banks shouldn't have got bailed-out either. Smaller banks that were responsible would have had the opportunity to grow when the larger banks faltered due to their bad decisions. As another commenter here quipped, the first houses Wall Street bought were in Congress.

lotsofpulp 3y ago

> The government may not explicitly protect home prices, It absolutely does by offering 30 year fixed rate loans with no prepayment penalty and all the underwriting waivers for people to be able to pay more than they can afford, such as no money down and 5% down mortgages.

clipsy 3y ago
And despite all that, home prices did, in fact, go down during the 2008 recession. And while the government does -- as you point out -- establish policy that biases the market in favor of home prices increasing, the government does not protect home prices the way it protects Wall Street from bad investments.
- lotsofpulp 3y ago
  “Wall Street” investments go down in price too (in real and nominal terms). Many businesses fail and cause equity owners to lose money. Just like home (land) prices in certain parts of the country. But the prices in the overall market, just like “Wall Street” is backed (and juiced) by the federal government.